01 September 2009

Cars, Homes and Stimulus

The Cash for Clunkers program increased car sales. Sales went up for Ford and VW, but down for Daimler and for Chrysler.

The aggregate additional sale came at a high price in government spending. This is because cash for clunkers payments were made on some car sales that would have happened without the program. How much did it cost the government to increase total sales? About $7,200 per additional car sold (with a maximum benefit per deal of $4,500).

The first time home buyer's credit costs about $43,400 per additional buyer (with a maximum benefit per deal of $8,000). It is a real credit although there is a penalty for a quick flip of the house.

1 comment:

CoachingByPeter said...

Many may not perceived it but it is actually the best time to purchase a new home because of the advantages it offers such as lower price, lower interest rates, tax savings, more choices etc. So instead of wasting money in renting a place, buying something that can be an equity is far more better option.